A mall story

The question is, with “the biggest mall under construction in the region” (Mall of Arabia) set to open this year, and more in the pipeline, is this optimism justified? As Trends Magazine reported earlier this year (in a story featured on Kipp) the picture on the shop floor is not necessarily as rosy as this analysis would have you believe, with retailers across Dubai struggling to earn enough to pay the rent.

“Some people will be affected, some people will do more business, some will do less profits, so of course everybody is asking for a rent reduction. It’s not just in Dubai, it’s everywhere,” the president of the Middle East Council on Shopping Centers, Maher Al Shaer, said at the time.

And the situation is set to get more difficult with the arrival of the new mall spaces. According to the chief executive of Aswaq Management Services in Abu Dhabi, Jean-Herve Bouyer, stabilized urban markets have an average gross leasable area (the measure of space in a retail property that can be rented to sell goods) of 14 square feet per capita. If all of the Dubai developments scheduled to open in 2010 do so, the city will have 24.7 square feet of leasable area per capita. The most mature mall market – and hence considered the one demonstrating the maximum limit – is the US, which works at 21.7.

To sustain this space increase, average consumer spending in Dubai needs to be $7,100 per year, says Bouyer. At its peak in 2008, it was $3,200. Dubai Chamber’s determined optimism is admirable, but may not prove accurate.

We used to have disposable income – now we spend it all on food … is it just me or did the price of food skyrocket over the summer? No one should have to pay AED 19 for two slices of melon.

Boza on August 29, 2010 9:21 am

Where are you shopping for you melons Samantha

Nigel on September 21, 2010 1:34 pm

There are too many malls, with too few people. The appetitie for new things here means that the newer malls such as Dubai Mall and Mirdiff City Centre will take away from the older malls. Changing demographics mean some malls malls will thrive and others will suffer.
I have closed seven of my stores in the last year. When Mall of the Emirates closed last year, sales were down 50% from 2008. I refused a rent increase and a demand by the landlord for me to fully refit my store. It has taken nealy a year for a new store to take my place.
And rents are still rising. Ibn Battuta doubled my rent this year (from 2009) – it’s now empty!
The amazing thing is that many retailers I know are complaining about hard times, but continue to accept rental increases.